Shrinking Retail Chain Says It Will Also Cut Staff

April 12, 1990|By Oscar Suris of The Sentinel Staff

Ames Department Stores Inc. said Wednesday it will reduce the staff at its corporate headquarters, following up on Tuesday's announcement that the retailer plans to close 74 of its unprofitable stores, including 20 in Florida.

The company, based in Rocky Hill, Conn., said 50 people will be cut from its staff of 1,700 at its Hartford-area corporate offices. Also, 150 vacant positions will not be filled. In January, the company eliminated 325 jobs at its headquarters - 85 through layoffs and 240 by not filling vacancies.

Earlier this week, Ames estimated a loss of $228 million for its fiscal year that ended in January.

The loss, which includes establishment of an after-tax restructuring reserve of about $150 million, resulted mainly from substantially lower-than-anticipated sales and profit margins at department stores purchased in late 1988 from Zayre Corp.

Buying the 400-store Zayre chain doubled the Ames empire, making the company the nation's fourth-largest discounter. With 690 stores, Ames trails only K mart Corp., Wal-Mart Stores Inc. and the Target division of Dayton Hudson Corp.

But Ames said it is closing the 74 former Zayre stores because they have little chance of making a profit.

''We looked to see if they were currently profitable and whether they were on their way to being profitable this year,'' Bill Roberts, a spokesman for Ames, said Wednesday.

''They are performing relatively well, and we do have a strong concentration of stores here,'' Roberts said. The chain will keep 62 stores in Florida.

Ames stock has been steadily dropping since April 5, when the retailer announced that its sales in March were down 12 percent.

The stock, which was trading at $9 a share on the New York Stock Exchange in early January, closed Wednesday at $2.50, up 12.5 cents. It was the most actively traded issue on the Big Board, with almost 2.3 million shares changing hands.

In late 1987, Ames stock was worth nearly $30 a share.

In addition to problems with the former Zayre stores, Ames has attributed its troubles to the sluggish retail market in the Northeast. The company has been unable to revitalize the stores by renaming them and has even lost some Zayre customers by changing that chain's advertising and pricing policies.